(Excerpted from MGMA Connexion, September 2006)
Managing overhead is critical to the economic success of a medical group. Seeing the escalation of various overhead items, such as excessive personnel salaries or general operating costs, means that action has to be taken to control expenses.
Key overhead expenses, shown as a median percentage of total medical revenue for a multi-specialty group that is not hospital-owned include support staff (29.04%) and general operating costs (29.16%).
General operating costs, include: information technology (1.56%), drug supply (3.84%), medical/surgical supply (1.5%), building and occupancy (5.97%), furniture and equipment (1.28%), administrative supplies/services (1.62%), professional liability insurance (2.18%), other insurance (0.25%), outside professional fees (0.53%), promotion/marketing (0.37%), clinical laboratory (1.91%), radiology/imaging (1.07%), other ancillary services (0.36%), billing purchased services (0.31%) and miscellaneous operating costs (1.37%).
Under this "median" example, total operating costs for a median multi-specialty group equal 58.77% of the revenue.
Since overhead costs vary by specialty, the following is a list of median overhead percentages for a variety of medical groups:
Anesthesiology: 11.69%
Family Practice: 57.63%
Orthopedic Surgery: 45.91%
Pediatrics: 59.18%
General Surgery: 40.58%
Whatever your specialty, the responsibility to manage costs does not change.
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